Manage Your Tax Risk

Managing tax is about looking after your ongoing responsibilities in an efficient manner. The preparation and filing of accounts and tax returns is important if you are to mitigate exposure to HMRC enquiry, avoid fines and to plan how to reduce your liabilities.

Case Study 1: Contractor employment status review

We were approached to review the employment status of contractors on the books of a large plant provider for infrastructure services. Our role involved the review of processes used to attract contractors, their induction, ongoing working relationship, payment, analysis of skills and internal manuals. There were records for six hundred contractors and an onsite visit was arranged to review primary documents as well as to meet with the office staff who regularly interacted with contractors. Four days were spent at the client’s premises identifying risks and ways they could be mitigated. Further works were undertaken offsite including the review of 203 forms, policy documents and procedure manuals. We were able to qualify potential exposure to PAYE and consider the likelihood of success by an HMRC challenge. Subsequent services were provided to improve policies and procedures to further mitigate future risks.

Case Study 2: Employer compliance review

A large employer based in South Wales engaged us to review their employer compliance. There were around two hundred employees being placed into various organisations on temporary roles. The review included national minimum wage operation, voluntary training provision, national minimum wage rules, expenses and benefits paid, termination payments and employment status. During the review, it transpired that HMRC were undertaking VAT enquiries. We were able to assist with reducing the risks associated with not operating national minimum wage correctly, provide guidance on expense policies and help manage the challenges made under the VAT enquiry. The client has subsequently retained us to provide ad hoc advisory services.

Case Study 3: Due diligence risks review

Two shareholders were selling their business and the advisers for the potential purchasers had identified a number of risks through due diligence. The adviser had quantified the liabilities and wanted a reduction of the purchase price. We were asked to undertake a review of the risks identified and establish the accuracy of the purported risks. A review was undertaken and risks were qualified. There were a number of complicated technical arguments which were openly discussed with the due diligence team. Furthermore, we were of the opinion that there were limitation issues as to how much tax exposure there could be. We presented our findings to the other advisers who were unable to dispute the limitations. As such we were able to agree a lower amount be held on escrow. We were then requested to assist with presenting the position to HMRC to obtain security on the tax treatment and the eventual release of escrow amounts.